"While regulations and updates are helpful, the greater the volume, the more complex it can be to be confident in interpretation."
The FCA introduced new regulations on defined benefit advice in 2018, however many advisers said they were concerned that the regulations may not be completely clear and could be subject to different future interpretations.
The regulator admitted in its final rules that repondents were 'disappointed' with its view of where the boundary lay between guidance and advice, suggesting that it was too narrow.
Aegon's survey found that advisers want to be more confident that the advice they provide is fully in line with the regulator’s expectations and won’t leave them open to any retrospective challenges. Misgivings about regulatory interpretations are having an impact on the defined benefit advice market, with three quarters (75%) of advisers saying it isn’t currently working as well as it could in meeting the needs of consumers.
Steven Cameron, pensions director at Aegon, commented: “Everyone accepts that advice on defined benefits is a highly complex area. Where consensus is harder to reach is exactly how the FCA’s updated regulations and suitability review comments should be interpreted.
“Previous and ongoing reviews of suitability from the FCA shows defined benefit advice remains under intense regulatory scrutiny. FCA strongly worded feedback provides further detail on ongoing weaknesses with some firms’ advice. Advisers clearly want as much regulatory certainty as possible and while regulations and updates are helpful, the greater the volume, the more complex it can be to be confident in interpretation.
“Aegon believes most people will be better off staying in their defined benefit scheme, but it is imperative that those wishing to review their options have access to advice. This means any further reduction in the supply of advice will be to the detriment of consumers. While advisers face other challenges, such as obtaining Professional Indemnity Insurance, we’re keen to address concerns over complexity of regulations. We hope our hub helps in this regard and provides advisers with more clarity when offering advice in this important area.”
